U.S. farm bill proposals come under fire in Europe

By Jeremy Smith

Reuters
Thursday, February 1, 2007; 11:16 AM

BRUSSELS (Reuters) - U.S. government proposals for a new
farm bill came under attack in Europe on Thursday for not
cutting subsidies enough to ensure success at a crucial stage
in world free trade talks.

U.S. domestic farm supports have been a sticking point in
the World Trade Organization (WTO) negotiations -- known as the
Doha Round -- for developing nations, which say they preclude
true global competition.

Critics say subsidies drive down prices and lock out poor
farmers in the developing world. But Washington says it can
only cut so much until others -- particularly the European
Union -- roll back import duties and let its farmers export
more.

On Wednesday, U.S. officials unveiled a plan to shield farm
subsidies from legal battles, shuffling some of the $87 billion
they want to spend over the next decade into programs that they
hope will not run foul of WTO rules.

U.S. cotton programs have already been successfully
attacked by Brazil at the WTO, and Canada has recently launched
a case against U.S. subsidies on corn and other crops.

Washington's trade partners have warned of further legal
challenges unless new farm trade rules can be agreed in the
Doha round.

The European Commission, the EU's executive arm, was quick
to point out what it saw as a series of shortcomings in the
U.S. administration's proposal for the 2007 farm bill -- the
umbrella law that sets subsidy, environment and nutrition
spending.

"If we are to have a successful outcome to the Doha Round,
the U.S. will need to propose more ambitious cuts and
disciplines in trade-distorting domestic farm subsidies," said
Michael Mann, the Commission's agriculture spokesman.

"So far as Doha is concerned, it is not possible for us to
form a clear view from this proposal of what the (U.S.)
Administration's negotiating approach will be," he said.

In Geneva, home to the WTO, trade negotiators agreed that
it was not immediately clear what the implications were for the
U.S. stance in the round.

"People will need to figure out these numbers align with
what has been proposed (by the United States) at the WTO," said
New Zealand's ambassador Crawford Falconer, who chairs the
round's farm talks.

Proposed cuts in loan deficiency payments, the basic
safety-net of the 2002 U.S. farm bill, were extremely modest,
Mann said. But the Commission noted a modest shift toward more
"green" direct payments, he said.

The U.S. proposal assumed that commodity prices would
remain at their current high levels, he said. If this was so,
domestic farm support would fall, he added -- but if price
trends changed, then trade-distorting farm support would rise.

The Doha negotiations on lowering barriers to commerce have
resumed after a six-month halt called by WTO chief Pascal Lamy
after major powers failed to break a long-running deadlock over
farm trade last July.